A grand jury declined to indict Letitia James on Thursday, according to a source familiar with the decision, which came less than two weeks after a judge ruled that a similar mortgage fraud case brought by federal prosecutors against the New York attorney general was unlawful.
The move by the justice department to present the case again to a grand jury was seen as a signal of its determination to prosecute James, who has been one of Donald Trump’s top political foes ever since she successfully brought a fraud lawsuit against him in New York.
James was first charged in October with one count of bank fraud and one count of making a false statement to a financial institution. The charges are in connection to a mortgage she obtained for a home in Norfolk, Virginia, in 2020. Prosecutors say James got a more favorable rate on the mortgage because she indicated it would be a second home when she actually wound up renting it out to others. The difference in rates saved her about $18,933 over the life of the loan. James’s niece lives in the home and reportedly told a federal grand jury earlier this year she did not pay rent.
James has said she did nothing wrong and argued that the prosecutor who handled it, Lindsey Halligan, was unlawfully appointed the US attorney for the eastern district of Virginia. Halligan, a former White House aide and Trump ally, personally presented the case to the original grand jury that indicted James.
Halligan was installed in the role in late September after Erik Siebert, her predecessor, was forced out after determining there wasn’t enough evidence to file criminal charges against former FBI director James Comey, another Trump rival. Comey, who was also indicted earlier this year, similarly argued that Halligan’s appointment was not legal.
US district federal judge Cameron McGowan Currie agreed with lawyers for James and Comey last month and said Halligan had been unlawfully holding her post. US attorneys must be confirmed by the US Senate, but can serve in an acting capacity for 120 days. Once that period expires, the judges of the district the prosecutor serves in must decide who serves as the top prosecutor. Siebert had already exceeded the 120-day mark and the district judges had chosen to extend his appointment. Once he left, Currie concluded, Trump could not simply appoint someone else to fill the role.
Aside from the appointment issues, experts said the criminal case filed against James in October appeared very thin. The amount that she benefitted over the type of the loan was so small that it would not typically merit prosecution, former prosecutors said. The second home rider that she signed with her mortgage also did not prohibit her from renting out the home outright. James also indicated in documents and emails with her mortgage broker that she did not intend to use the home as a primary residence. Career prosecutors who worked on the case concluded there was not enough evidence to charge James have since been fired.
